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tv   Nightly Business Report  PBS  September 18, 2012 7:00pm-7:30pm PDT

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>> susie: good evening. i'm susie gharib. from china to packages here at home, fedex says a slowdown is taking the wind out of the global economy. >> tom: i'm tom hudson. are you one of the 47% of americans that don't pay federal income taxes? mitt romney pushes taxes to the forefront of presidential politics. >> susie: and ford c.e.o. alan mullaly puts to rest rumors he's prepping for retirement, telling us he's staying put as he rolls out the new ford fusion. >> tom: that and more tonight on "n.b.r." seeing the world one box or envelope at a time gives a company a unique perspective on the global economy. today, that company is fed-ex,รงรณ and the picture it paints isn't encouraging. the shipping giant saw its
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fiscal first-quarter profit drop 1%. it also lowered its earnings outlook for the rest of the year. fedex now expects full year earnings to be a maximum of $6.60 a share. that's much lower than the guidance it gave in june. as erika miller reports, that forecast is not just bad news for transportation companies, fedex's gloomier outlook casts a shadow over just about every industry. >> reporter: fedex is no ordinary stock. the company delivers packages to over 220 countries, reaching 95% of global g.d.p. >> fedex has a good view into every aspect of the global economy, and what they are saying is that it's slow everywhere. >> reporter: fedex is also watched closely because it has an unusual fiscal year. it wrapped up its first quarter on august 31. so today's report gives one of the first readings on business conditions during the summer. fedex chief fred smith delivered the bad news. >> while fedex ground and fedex freight improved their profitability in the first
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quarter, the slowdown in the global economy and global trade constrained revenue growth at fedex express and affected overall earnings. >> reporter: fedex also lowered its 2013 g.d.p. forecasts. it now expects u.s. economic growth will be under 2% next year. globally, it sees g.d.p. growth at 2.7%. economists say that may be optimistic. >> things could actually turn out worse than what their forecasts are quite easily. the big wildcards are, what's the effect of qe3 on activity going forward? how quickly can european policy makers start to implement the proposals they've recently made? and how quickly can china start to stimulate its economy? >> reporter: there's one thing that will help fedex short-term: the iphone 5. fedex is apple's primary shipping partner on the hot new device, and, in spite of global economic weakness, some analysts think now is a good time to buy the stock.
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>> their earnings are down from a year ago, but they are still strongly profitable, generating a lot of cash and using that cash to invest in their business so that when the economy does come back-- and it will eventually come back-- this is a company that will benefit. >> reporter: the next update from fedex will come at an investor meeting the second week in october. the company will be providing more details about its business forecast and cost-cutting plans. erika miller, "n.b.r.," new york. >> reporter: coming up, we'll take you inside hershey's $300 million plant expansion. >> susie: that gloomy forecast from fedex weighed down stocks. investors are concerned about the weak global economy. but there was some encouraging news about the u.s. economy today. home builders are upbeat. the national association of homebuilders' confidence index rose three points this month to a reading of 40.
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that's the highest confidence level since the housing bubble burst six years ago. on wall street, the dow rose a bit, up 11 points. but the nasdaq and s&p were down fractionally. >> tom: oil prices continued sliding today, following yesterday's late-day price drop. market regulators are looking at that price plunge, down more than $3 per barrel in the final 40 minutes of monday's trading session. traders said the move was exacerbated by light trading volume thanks to the jewish new year. today, october crude futures fell $1.33 to settle at $95.39 per barrel. meanwhile, the white house continues saying all options are on the table when it comes to dealing with rising energy prices, but there are no plans right now to release oil from the nation's strategic petroleum reserve.
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>> susie: gasoline prices are still hovering near $4 a gallon, but ford motor says that's not holding back consumers from buying new fuel-efficient cars. ford c.e.o. alan mulally is counting on big sales from the new 2013 fusion. he unveiled the hybrid version today with ryan seacrest in new york's times square. when i talked with mulally later in a manhattan ford dealership, i asked him how important the new fusion is for ford's growth plans. >> we commitmen committed to th. it's the last vehicle that is bringing to the market. with that design. >> susie: some people are calling the fusion a killer can
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ford out sell toyota. >> i really think if people seee feefeatures they are going to really, really appreciate the value. >> ford's market share in theu.u going to boost the share and what role does the future play in all of that. >> the fusion and all of ourvehy supporting of the market share. this year we have racking u racg up our productions and we can't make as many vehicles as people want right now. with the new vehicles coming on-line we'll be in very good shape this year. >> susie: what is your take on consumers 4 for gas are are they in the mood to buy cars. >> vehicles are so important in. we have a demand and you need a
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vehicle they can economically replace the older vehicles. even though we have concerns it's an expansion, the economy is expanding and people need new fuel efficient high quality vehicles right now. so they have those choices with ford. >> what about europe?you are exf something like a billion dollars this year. what are the plans to get back in the books. >> europe is a concern for allof the country is in a recession. i'm encouraged that the leaders are working on a fiscal monetary policy to deal with the s sovereign debt. we have a great presence in europe and no. 2 brand in europe and russia. we have new vehicles for our european customers and we have been profitable for the last eight years. >> we'll continue to intro zeuse our selves to the new brand.
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>> susie: what circumstances would you consider closing the operations that ford has in europe. >> a lot of if has to do withtht comes back. we also want t to be there to support the industry. >> we are back in the unitedstal demand and we are offering profit plans. >> susie: one big question for ford investors is succession who is going to step behind the wheel of formed when yo ... forn you are no longer here? >> well i can tell you, you iha. from the day i arrived we have been working on the pension plan not just the pension plan but redevelopment. you can see the quality of formed worldwide. i'm very pleased with the leadership development and the plan and we continue to review it with the board. i'm on the board and it's important for me to be so. i announced now and i'm pleased
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to have served ford. >> susie: thank you so much. >> thanks a lot.you look very g. >> tom: several japanese auto makers have stopped production in china as anti-japanese protests continue. nissan, honda, toyota and mazda, along with other japanese businesses like sony, panasonic and canon, all closed their chinese plants to protect workers during the demonstrations which started over the weekend. the protests are in reaction to a dispute between china and japan over several islands near taiwan. the affected businesses face major short-term losses.
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>> susie: our national debt and how to pay for it is center stage in washington. earlier this month, the treasury department announced the national debt topped $16 trillion, but what does that number actually mean for the country's bottom line? as darren gersh kicks off our look this week at the national debt, he says it's more complicated than you might think. >> reporter: for this story, i'm going to ask you to focus on three numbers-- 11.3 trillion, 4.8 trillion and 16.4 trillion. why 11.3 trillion? it's the amount of money the federal government owes to the public. that's people who hold u.s. treasuries in their mutual funds and governments like china that buy our debt. debt held by the public is the number that markets focus on. >> and this is what has economists worried is because we are adding to our debt held by the public faster than we are adding to the size of our
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economy. >> reporter: debt held by the public, that $11.3 trillion, is debt that must be paid. >> when you are talking about debt held by the public, if you don't pay it on time and in the right amount, then there's a default, and that's catastrophic. >> reporter: now, $4.8 trillion is the amount of debt held in places like the social security and medicare trust funds. technically, this is called an intragovernmental holding because it is debt one part of the government owes to another part of the government. the social security trust fund, for example, is made up of special debt issued by the u.s. treasury. and when it comes to this $4.8 trillion in debt, the government has some wiggle room. >> you can reschedule debt that's internal. you can change benefit formulas. you can delay things. so there is more flexibility on that. >> reporter: add up debt held by the public and the debt held in all the government trust funds and you get gross debt. you may have heard that just crossed $16 trillion.
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gross debt is subject to the debt limit congress sets on the government's ability to borrow, and that limit is $16.4 trillion. we'll hit that $16.4 trillion figure sometime in february or march. >> when 16.4 in gross debt is reached, the u.s. will not have the ability to pay its debts in full and one time. so that's the important number. >> reporter: whether you focus on gross debt or debt held by the public, you arrive at the same place: if we do nothing, eventually our borrowing will scare investors away, forcing us to slash our spending or raise taxes or both. the problem is, no one knows exactly what level of debt will trigger such a crisis. darren gersh, "n.b.r.," washington. >> susie: tomorrow, former senator sam nunn joins us. we'll talk about how our debt impacts national security. to learn more about the national
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debt, go online to www.nbr.com. >> tom: the number of americans paying income taxes was the hot topic of the presidential campaign today. a video of republican presidential nominee mitt romney at a private fundraising event in may was posted online by the liberal magazine mother jones. in his comments, romney described supporters of president obama as "dependent upon the government." >> there are 47% of the people who will vote for the president no matter what. all right, there are 47% who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name- it. that-- that's an entitlement, and the government should give it to them. and they will vote for this president no matter what. >> tom: now, late last night, romney said his comments were about the political process of attracting voters. >> of course, individuals are going to take responsibility for
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their lives. my campaign is about helping people take more responsibility and becoming employed again, particularly those who don't have-- don't have work. this whole campaign is focused on getting people jobs again, putting people back to work. >> tom: the number romney used in his fundraising comments, 47%, may have come from this man's group. donald marron is the director of the tax policy center. and he is responsible for that group. and originally as 46% number don that you found of americans that paid no federal income tax in 2011. perhaps the govenor was rounding up to 47%. how come these americans didn't pay income tax on a federal level. >> for a couple of reasons.you c income tax is designed. people don't pay any income tax at all until their income reamsm ... reaches a certain level. if you have no income you will not pay federal income tax.
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policy makers of both parties have put in place a variety of preferences for different groups. the two most common are senior citizens. the vast majority of social security benefits are not taxed even if they are a form of income. the child tax credit and the earned income tax credit are to help working low income of families with children. if you add that that accounts for the 90% of the folks that don't pay income tax. >> part of it is the tax code.he to the historic number of americans that don't pay federal income tax? >> it's higher today than it'sbr today than we expect it to be in the future. there are two reasons for that. the main reason we have gone through a dramatic economic
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downturn. we are still recovering from that. people's incomes are lower. people have lost jobs and they have lost hours and they have to accept lower wages. and as a result more people are down at the income levels where they have no income tax at all or they have no income tax after they take account of the various benefits. the other reason is that policy makers over time have expanded these benefits there for extending the folks that pay no hincome tax. >>tom: i want to take a look at the gross tax receipts. the individual income tax accounts for half of the revenue coming into the federal government. 66% of the taxes collected last year and employment taxes and corporate taxes and exercise tax ... ex-cise taxes. is it fair to say that 46%. >> many of those people paysomey
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are out there working and they are paying in social security trust fund. >> and medicare. >> and then obviously weshouldnl governments. these folks go out and consume things and they pay taxes. >> some of them own homes andpa. our nation there are many ways to pay taxes other than the federal income tax. >> sure not all of that goes to. property taxes goes to another agency. great debate. tom marron along with us from the tax policy. policy.
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a big personnel change at goldman sachs. long time chief financial officer is retiring. he will leave the firm in late january. replacing him harvey schwartz who currently serves as goldman's. >> tom: the narrow trading ranges continued with the major stock indices in a relatively quiet session. the s&p 500 was in negative territory the entire session. it made one unsuccessful run toward the unchanged line in the late morning. the index finished down a fraction. 629 million shares traded on the big board, 1.7 billion on the nasdaq. the consumer staples stock sector put in the best gain, up 0.5%. the energy sector saw the biggest drop, down 0.7%. kraft foods was one of the best consumer staples stocks, trying to recover some of what it lost last friday when it was announced kraft would be leaving the dow jones industrial average. shares were up 1.8% today,
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closing about $2 below where they were before the dow jones exit announcement. shares have been climbing as it prepares to split into two separate companies next month. the lower earnings outlook from fedex that erika reported on earlier was felt throughout the transportation sector, and a drop in oil prices couldn't help. air carriers delta and united continental fell. delta was down 2.9%, united shed 2.3%. railroad kansas city southern was down 1.8%. k.s.u. may be seeing some profit-taking after hitting an all time high on friday. two companies struggling against apple's iphone and google's android smartphone software are teaming up. microsoft and research in motion announced a licensing deal today. it covers a specific microsoft technology, allowing some blackberry devices to handle certain types of larger sized files at higher speeds. >> this is a win for rim in the sense that the product will be a
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little bit better. but i've never heard anyone say, "wow, i'm going to buy an iphone because it has a better file sending package than rim, than a blackberry." and i think that is definitely not the problem. it's a holistic problem, and i think that this isn't going to come close to fixing it. >> tom: trading volume doubled in rimm shares, with the stock up 2.3%. still, as the blackberry has continued to lose market share, the stock is down almost 70% from a year ago. microsoft shares lost a fraction. the company has similar technology licensing deals with sharp, sony and sanyo for their smartphones. speaking of technology, f-5 networks may have one less competitor to worry about when it comes to a data center technology used to keep computer servers from slowing down. cisco systems will stop developing new products, focusing on other growth opportunities, according to cisco. f-5 shares jumped 4%, closing at their highest price since late may.
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three of the five most actively traded exchange traded products were down. the biggest rally was the gold trust e.t.f., rising 0.8%. and that's tonight's market focus. >> susie: a sweet gain for hershey shares today, up almost 1% to more than $71 a share. ruben ramirez caught up with the company's c.e.o., j.p. bilbrey, as the company marked the official opening of its new manufacturing facility right down the street from where hershey made its first chocolate bar in 1894. >> reporter: set on a hilltop in rural pennsylvania is hershey's gleaming new manufacturing home. the $300 million plant expansion and upgrades make it one of the largest and most modern candy making facilities in the world. hershey's c.e.o., j.p. bilbrey, says the idea behind what the company calls project next century was to invest for the future. >> we're really excited that
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this investment has more than doubled the square footage of the plant we have. >> reporter: the plant expansion is one of pennsylvania's largest manufacturing investments since hershey built the first phase of the plant 21 years ago. according to hershey, the addition pumped about $70 million directly into the region's economy and created more than 300 construction jobs. >> we were able to use local manufacturers, we were able to use labor from the market, and so the commitment that we made really created jobs in pennsylvania. >> reporter: while pennsylvania's economy and many companies struggled through the global financial crisis, bilbrey says hershey proved to be recession-resistant. the company expects sales for the year to climb at least 7%. >> these are simple indulgences. they're available to the masses. they're accessible. it's a way people can have fun. they can have an indulgence that maybe they otherwise wouldn't be
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able to have. and we feel great to be able to bring really, really high quality products to consumers all around the world. >> reporter: 85% of hershey sales come from the u.s. growing sales overseas is a top priority. >> the growth that is available in these markets is really important, and it's about growing the category and not just competing for market share at a very high cost. it's actually very attractive growth. so we feel really good about that. we're excited about the growth potential. we've been growing at about 20% to 25% in our businesses outside of north america, so we're well on our way to achieving our goals in our current five-year strategic plan. >> reporter: one way hershey is growing is by taking customers from its bigger rivals mars- wrigley and kraft-cadbury. >> hershey has been focused over the last several years in terms of investing behind their core brands both in product innovation and marketing support, and you're seeing those investments yield measurable improvements. >> reporter: lash says that while sales volumes have declined slightly in the last two quarters, hershey has been able to make up for it by
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adjusting packaging sizes and raising prices. one constant: the size of a hershey's kiss. so, just how many hershey's kisses come off the line each day? >> this factory has the ability to create over 70 million kisses a day. that's a lot of kisses. >> reporter: if you were to take them and put them side by side, you'd have a line that would stretch from new york to shanghai and back again more than 20 times. ruben ramirez, "n.b.r.," hershey, pennsylvania. >> susie: could hershey shares be the sweet spot for your portfolio? find out online. go to www.nbr.com for michael kahn's technical analysis of hershey stock. you'll find it under the "blogs" tab. >> tom: tomorrow on "n.b.r.": we tour the housing market, from new construction to sales of existing homes. we find out if the fledgling recovery in housing continues.
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chicago kids will headhood back to the classroom tomorrow. they voted late today to suspend their strike. the above ends a co confrontatin with the mayor. 350 thousand kids go back to school. that is the nightly business report have a great evening. >> thanks for joining us on the. we have plenty more on-line at nbr.com see you righ right backe tomorrow captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org
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>> join us anytime at nbr.com. there, you'll find full episodes of the program, complete show transcripts and all the market stats. also follows us on our facebook page at bizrpt. and on twitter @bizrpt.
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